Tele2 Best Norway Option Is Sale to TeliaSonera, Berenberg Says

Tele2 AB, the phone carrier evaluating options for its Norwegian business, would benefit the most by selling its assets in the country to rival TeliaSonera AB, according to Berenberg Bank.

TeliaSonera could justify a deal for Tele2 Norway at 6 billion kronor ($922 million), compared with the 3 billion kronor to 4 billion kronor that analysts typically value the unit at, Barry Zeitoune, an analyst at Berenberg in London, said today in an e-mail.

Johan Dennelind, TeliaSonera’s chief executive officer, said in an interview yesterday he is “keen” to be part of consolidation in Europe and wouldn’t rule out looking at Tele2 Norway. Buying the assets would let Stockholm-based TeliaSonera, the second-largest Nordic phone company, better challenge larger rival Telenor ASA in its home market.

TeliaSonera and Tele2 both trail Fornebu, Norway-based Telenor, which had about 59 percent of Norway’s wireless revenue in the fourth quarter. Tele2 had about 15 percent of wireless revenue, while TeliaSonera garnered about 27 percent, according to data compiled by Bloomberg.

Tele2 shares rose 0.1 percent to 79.30 kronor at 11:48 a.m. in Stockholm, while TeliaSonera fell 0.3 percent to 45.68 kronor. Telenor advanced 0.8 percent to 132.20 kroner in Oslo.

The cost of insuring against default by TeliaSonera jumped as much as 7.7 percent to 44.2 basis points, the biggest intraday move in two weeks. That compares with a 1.5 percent increase in the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies.

Seizing Opportunities

Norway, with a population of about 5 million, now has four mobile carriers vying for customers after Ukrainian-born billionaire Len Blavatnik’s Access Industries Holdings Inc. won spectrum for a new, faster service in an auction in December.

Tele2 CEO Mats Granryd said he’s “not satisfied” with the auction outcome, and the company hired ABG Sundal Collier Holding ASA to evaluate strategic options in Norway, including a potential sale. Lars Torstensson, a spokesman at Tele2, declined to comment.

“We are in many of our markets leading and our aspiration is to continue leading,” TeliaSonera’s Dennelind said in the interview in Stockholm. “You have to be active when opportunities are there.”

A year ago, Tele2 agreed to sell its Russian unit to lender VTB Group for about $2.4 billion. Tele2’s exit from Russia after 12 years followed the carrier’s failure to win a wireless license to run faster services in the country, leaving it with an outdated network.

Norway accounted for 13 percent of Stockholm-based Tele2’s

7.57 billion kronor of sales in the last quarter of 2013, behind its Netherlands business and Sweden. Its home market made up 42 percent of revenue. Sales in Norway fell 12 percent to 983 million kronor as Tele2 lost 3,000 mobile customers, leaving it with 1.12 million users.

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